The Impact of Preferences on Early Warning Systems - The Case of the European Commission's Scoreboard
Tobias Knedlik
European Journal of Political Economy,
2014
Abstract
The European Commission’s Scoreboard of Macroeconomic Imbalances is a rare case of a publicly released early warning system. It allows the preferences of the politicians involved to be analysed with regard to the two potential errors of an early warning system – missing a crisis and issuing a false alarm. These preferences might differ with the institutional setting. Such an analysis is done for the first time in this article for early warning systems in general by using a standard signals approach, including a preference-based optimisation approach, to set thresholds. It is shown that, in general, the thresholds of the Commission’s Scoreboard are set low (resulting in more alarm signals), as compared to a neutral stand. Based on political economy considerations the result could have been expected.
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On the Stability of Preferences: Repercussions of Entrepreneurship on Risk Attitudes
Matthias Brachert, Walter Hyll
IWH Discussion Papers,
Nr. 5,
2014
Abstract
The majority of empirical studies make use of the assumption of stable preferences in searching for a relationship between risk attitude and the decision to become and stay an entrepreneur. Yet empirical evidence on this relationship is limited. In this paper, we show that entry into entrepreneurship itself plays a decisive role in shaping risk preferences. We find that becoming self-employed is indeed associated with a relative increase in risk attitudes, an increase that is quantitatively large and significant even after controlling for individual characteristics, different employment status, and duration of entrepreneurship. The findings suggest that studies assuming that risk attitudes are stable over time suffer from reverse causality; risk attitudes do not remain stable over time, and individual preferences change endogenously.
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Relative Deprivation and Migration Preferences
Walter Hyll, Lutz Schneider
Economics Letters,
Nr. 2,
2014
Abstract
In this letter, we overcome the existing shortages with respect to the assignment of individuals to reference groups and are the first to show that individual aversion to relative deprivation plays a decisive role in shaping migration preferences.
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Social Capital and Migration Preferences - An Empirical Analysis for the Case of the Reunified Germany
Peter Bönisch, Lutz Schneider, Walter Hyll
Grincoh Working Papers July 2013,
2013
Abstract
We focus on the relevance of different types of social capital on migration intentions in the context of shrinking regions. On the one hand, formal social capital characterised by weak ties without local roots is supposed to drive selectivity and outmigration. On the other hand, informal social capital stressing strong ties to friends, relatives or neighbours might hinder migration. In our regression results we do not find an effect of shrinking regions on mobility intentions. Thus, living in a shrinking area is by itself not a reason to move away or to invest less in social capital. However, if an individual considers to move away she reduces her participation in informal and formal networks. Individuals characterised by strong informal ties, i.e. strong relationships to friends, relatives or neighbours show a significantly lower probability of moving away. And, more qualified types of social capital as participation in local politics or initiatives seem to encourage spatial mobility.
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The European Commission’s Scoreboard of Macroeconomic Imbalances – The impact of preferences on an early warning system
Tobias Knedlik
Externe Publikationen,
2013
Abstract
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The Role of Uncertainty in the Euro Crisis - A Reconsideration of Liquidity Preference Theory
Toralf Pusch
Journal of Post Keynesian Economics,
2013
Abstract
With the world financial crisis came the rediscovery of the active role fiscal policy could play in remedying the situation. More recently, the Euro Crisis, with its mounting funding costs facing governments of a number of Southern EU member states and Ireland, has called this strategy into question. Opposing this view, the main point of this contribution is to elaborate on the link between rising sovereign risk premia in the Eurozone and a major feature of the financial crisis - elevated uncertainty after the Lehman collapse. Theoretically, this link is developed with reference to Keynes' liquidity preference theory. The high explanatory power of rising uncertainty in financial markets and the detrimental effects of fiscal austerity on the evolution of sovereign risk spreads are demonstrated empirically by means of panel regressions and supplementary correlation analyses.
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Smuggling Illegal Goods Across the US–Mexico Border: A Political-economy Perspective
A. Buehn, Stefan Eichler
Applied Economics Letters,
Nr. 12,
2012
Abstract
We analyse the impact that political business cycles and party preferences have on smuggling illegal goods across the US–Mexico border during the years 1980–2004. We find that smuggling is significantly reduced prior to Congressional elections – but only if the incumbent President is Republican.
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The Tradeoff Between Redistribution and Effort: Evidence from the Field and from the Lab
Claudia M. Buch, C. Engel
Max Planck Institute for Research on Collective Goods Working Paper,
Nr. 10,
2012
Abstract
We use survey and experimental data to explore how effort choices and preferences for redistribution are linked. Under standard preferences, redistribution would reduce effort. This is different with social preferences. Using data from the World Value Survey, we find that respondents with stronger preferences for redistribution tend to have weaker incentives to engage in effort, but that the reverse does not hold true. Using a lab experiment, we show that redistribution choices even increase in imposed effort. Those with higher ability are willing to help the needy if earning income becomes more difficult for everybody.
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